EXCLUSIVE— A financial institution’s innovation is only as good as its partners, and more and more, FIs are finding the key to their next project or technology in what’s becoming a staple of open banking: the startup marketplace.
Generally built via APIs with a fleet of tools, third-party providers and applications, these marketplaces allow participating banks to easily integrate new technology features or capabilities into their own platforms.
Take the marketplace provided by UK digital challenger Starling Bank, for instance, or the one maintained by financial technology provider Temenos.
“Think of it like an app store. We created a marketplace with best in breed third-party providers, and we also provide a one or two-way integration,” Emily Steele, president, Temenos North America, told Bank Innovation, an integration supported via APIs. “We have about 75 providers [in the marketplace].”
These providers can integrate their services with over 700 banks, according to Temenos’s website, a method of partnership growing more common as more FIs flock to open banking. This shift to a more API-driven ecosystem also means more banks are looking to move their services to the cloud or to better automate their solutions, Steele said.
“Banks don’t want to maintain infrastructure, they want to de-risk,” Steele told Bank Innovation, something that is driving more banks to utilize solutions like Temenos’ cloud service, which currently supports about 20 top FIs across the globe. The company will have its first U.S. company using the platform later this year, Steele said, though the institution could not be named at this time.
All of this adoption is driven by the fact that banks have more competition than ever before: not simply from other incumbent banks and challenger fintechs, but from larger technology services like Amazon (whose recent dip into checking is being closely watched by the industry.
“I definitely think that FIs are looking at [more] competition. You have all of these fintechs coming at you sideways: I think it’s a different layer of competition that’s really forcing them to innovate faster,” Steele said.
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